I'm extremely confused! Oil prices are dropping, but the price of diesel seems to be increasing. Petrol seems to be falling. When I first had a diesel car, diesel was about 4p/L more expensive than petrol, but today I have seen unleaded 11p/L cheaper than diesel. What is going on? Are diesel drivers being fleeced by oil companies, cashing in on the unpopularity of diesel?

In Ireland Diesel is king as its has always been cheaper than petrol, At my local independent fuel station diesel is 1.36 euro per litre but you can get it for less at some stations i have seen it as little as 1.27 per litre (as listed in - Click Here - )

routemaster1 wrote ...What is going on? Are diesel drivers being fleeced by oil companies, cashing in on the unpopularity of diesel?

I think it's more likely the government putting pressure on the oil companies to deter people from buying diesel cars.

As the tax is the same and refining costs are very similar I cannot see any other explanation. It's bound to see its way through to the cost of things in the high street as transportation costs increase.

The Saudi’s have been reducing production (well, OPEC but we all know who calls the shots) as a response to reduced oil prices so future buying has got more expensive - the actual price today for oil is only part of the story. Added to this the lack of supply due to the US (and by virtue of that everyone who does business with them) embargo on Iran and the future hedging is volatile.

At work we buy most of our energy 18 months to 2 years ahead - the price today is largely meaningless, it only accounts for 0-5% of what we pay.

Crude oil prices are falling, but oil is priced in dollars so a weak pound means we don't always see a direct link - there is a currency effect.

There is always a lag between crude price and pump price - the petrol in your tank was purchased maybe a week ago, it was delivered to retailer a week before that, it was refined before that and maybe the processor contracted for the crude oil 3 months before that - so we might see some falls in pump prices soon. Who knows.

Oil companies are there to make a profit for their shareholders, not to sell as cheaply as they can. It needs someone to have a bit if overcapacity/overstock to start to drive prices down. Refineries need to operate at about 90% utilization to make any money so the supply/demand/pricing calculation gets complicated. I think refiners can slightly adjust the balance between diesel and kerosene (domestic heating oil) but Autumn is high demand for that.

The diesel/petrol price is simply demand driven - see below from the 2018 report of UK refining industry. We make too much petrol, so export some, but have to import quite a lot of refined diesel. The £/Euro and £/Dollar rates will have a very direct impact, plus the cost of getting it here. If we leave the EU without a deal next March, WTO rules mean a 3% tariff on imported refined oil products so the gap will grow even more.

Diesel has less calorific value by weigh than petrol, but its is heavier. That means a litre of Diesel has about 15% more 'energy' in it than a litre of petrol, so the price difference still seems good value. We are after all buying energy.

UK refineries, in common with those in the EU, were configured predominantly to produce petrol and therefore have a mismatch between domestic production and demand

Fiscal policy in the EU has driven up demand for diesel and demand for air transport has also increased aviation fuel use.

Consequently, the UK has a deficit of aviation fuel and diesel, whilst it exports surplus petrol and fuel oil

The diesel/petrol price is simply demand driven - see below from the 2018 report of UK refining industry. We make too much petrol, so export some, but have to import quite a lot of refined diesel. The £/Euro and £/Dollar rates will have a very direct impact, plus the cost of getting it here. If we leave the EU without a deal next March, WTO rules mean a 3% tariff on imported refined oil products so the gap will grow even more.

Diesel has less calorific value by weigh than petrol, but its is heavier. That means a litre of Diesel has about 15% more 'energy' in it than a litre of petrol, so the price difference still seems good value. We are after all buying energy.

UK refineries, in common with those in the EU, were configured predominantly to produce petrol and therefore have a mismatch between domestic production and demand

Fiscal policy in the EU has driven up demand fordiesel and demand for air transport has alsoincreased aviation fuel use

Consequently, the UK has a deficit of aviation fueland diesel, whilst it exports surplus petrol and fuel oil